Olanzapine is useful for treating psychotic patients and is currently being investigated for such use. Applicants have discovered that Form II olanzapine is the most stable anhydrous form of olanzapine, providing a stable anhydrous formulation with pharmaceutically desired characteristics, (See European Patent Specification No. 733,635). Careful preparation and controlled conditions are necessary to assure substantially pure Form II olanzapine product (hereinafter referred to as "Form II"); however, Applicants have discovered a process for preparing the desired Form II using a dihydrate olanzapine intermediate under aqueous conditions. In certain situations, Form II which has been prepared from an aqueous solvent may be particularly advantageous. Such Form II material prepared from an aqueous solvent provides assurance that the Form II material is free of substantially all organic solvent residues. This process can provide an especially ecologically desirable method for providing the desired Form II.